What is the penalty for failing to file a complete or timely annual report?

• A. An amount up to 10% of the incurred liabilities in the last report or $1,500
• B. An amount up to 5% of the incurred liabilities in the last report or $1,500
• C. An amount up to 10% of the incurred liabilities in the last report or $3,000
• D. An amount up to 5% of the incurred liabilities in the last report or $3,000

Answer: (B)

The penalty for failing to file a complete or timely annual report is an important regulatory measure designed to ensure compliance and accuracy in financial reporting. The correct answer indicates that the penalty can be up to 5% of the incurred liabilities in the last report or a flat fee of $1,500. This structure emphasizes a balance between being proportionate to the size of the liabilities reported and maintaining a reasonable maximum penalty to incentivize timely and accurate submissions.

This penalty serves as a deterrent against late or incomplete filings, which could jeopardize the financial stability of an organization or leave stakeholders uninformed. It is based on the idea that a small percentage of incurred liabilities can effectively reflect the seriousness of the oversight while not being overly punitive. The flat fee also provides a clear cap that is manageable for entities hoping to avoid further financial burdens as a consequence of noncompliance. Thus, the structure of this penalty ensures that organizations remain diligent in their reporting requirements while recognizing the practicalities of financial management.